Good afternoon, and welcome to AudioEye's First Quarter 2019 Earnings Conference Call. Joining us for today's call are AudioEye's Executive Chairman, Dr. Carr Bettis; and CEO, Mr. Todd Bankofier. Following their remarks, we will open up the call for your questions. I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at www.audioeye.com. Before I turn the call over to AudioEye's Executive Chairman, the company would like to remind all participants that statements made by AudioEye management during the course of this conference call that are not historical facts are considered to be forward-looking statements. Private Securities Litigation Reform Act of 1995 provides the safe harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify forward-looking statements. These are statements of predictions, projections or statements about future events and are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's press release and the comments made during the conference call and in the Risk Factors section of our Annual Report on Form 10-K, our quarterly report on Form 10-Q and our other reports and filings with the Securities and Exchange Commission. Participants on this call are cautioned not to place undue reliance on these forward-looking statements, which reflect management's belief only as of the date hereof. AudioEye does not undertake any duty to update or correct any forward-looking statements. Now I would like to turn the call over to AudioEye's Executive Chairman, Dr. Carr Bettis. Sir, please proceed.

Thank you, Operator. Welcome, everyone, and thank you for joining us today. After the market closed, we issued a press release announcing our results for the first quarter ended March 31, 2019. A copy of the press release is available in the Investors section of our website at AudioEye.com. As many of you dialing in today are aware, AudioEye is a leading provider of SaaS-based digital content accessibility solutions. We're in the business of making websites and other digital content accessible for all individuals, especially those individuals with disabilities. We pride ourselves in addressing a large range of accessibility issues that impact many people. With the AudioEye platform, the Ally platform as we call it, we do more than identify issues with web properties, we strive to fix, maintain and continuously monitor them. We also certify websites to demonstrate compliance with both the American with Disabilities Act, or ADA, and the latest Web Content Accessibility Guidelines, or WCAG 2.1. Because many of the remediation capabilities we provide are automated, our customers can more quickly gain compliance with accessibility standards, regulations and laws. Coupled with manual testing and remediation by Subject Matter Experts, we provide our clients with the best solution to make their websites and digital content more accessible in keeping that way. Furthermore, for our commercial clients, we also give them the opportunity to get an ROI from their investment and commitment to the enormous population of individuals with disabilities. The first quarter was a strong start to the year that has us in good position to continue ramping our growth efforts throughout the balance of 2019. Operationally, we brought in some major new customers on the direct site, representing some of them are significant companies within the Global Fortune 500. And on the indirect side, we continue to…

Thanks, Carr. And I also want to provide my personal welcome to Sach as well. It is very great to have him join the AudioEye team. We're really, really excited about it. Let's start with the first quarter. The first quarter was a good start to what we think will be a great year for our business. We continued to secure contracts with some of the biggest companies in the world, including Global Fortune 500 companies as well as increasing our market reach across additional major players in the content management system, or CMS industry, and we have specifically identified additional market opportunities where our accessibility solutions can make an immediate impact. As we've done historically on these calls, I'm going to orient my remarks around providing additional color on our three sources of customer success, which are direct sales, indirect channel partnership sales and customer retention. First, direct sales. We remain extremely excited about the list of everyday household names joining our customer list as well as being included in our fast-growing pipeline of potential customers. When companies realize the AudioEye values of speed to compliance, certification, always on accessibility and usability for a large set of users, the ROI and the value of our service wins over even the most sophisticated of buyers. We're also looking forward to being able to announce a number of new customers in the days and weeks ahead as AudioEye continues to stand out in the marketplace. Before I get into the highlights of our indirect channel, I'd like to spend a few minutes on -- in discussing some of our newer opportunity, those being PDF remediation and kiosk. As Carr mentioned earlier, the PDF remediation business has really developed faster than we anticipated. We just realized -- and I'm sorry, we just…

[Operator Instructions]. The first question comes from the line of Zach Cummins with B. Riley FBR.

You said that quarterly cash contract bookings were pretty well in line with expectations, and you kind of laid out how you expect this to go as we move throughout 2019. I mean can you just provide a little more context around that? I mean it sounds like Q3's going to be a seasonally weaker quarter for you typically, but then it's even more so of these bookings are now getting shifted into Q4 of the year. Am I thinking about that in the right way?

No. We've actually always expected Q4 to be a strongest quarter, it traditionally is. Some of our larger contracts are in that quarter for renewal, we expect high renewals. So it's not really new for us in terms of thinking about the year. That's been consistent with our expectations all along that Q4 is particularly strong and we've seen -- all signs point to it being very strong. On the other hand, we're having a great start to the second quarter, as we said, and we expect to have a good -- we expect to have a very good third quarter as well.

Understood. And then in terms of the indirect channel, it sounds like a few of these projects are taking a little bit longer to ramp up than you're expecting. I mean, in your mind, is there really anything that you can do from your end to accelerate the ramp of this project? Or is that more so just kind of going along with the customers' time line and when they're planning on rolling out these initiatives?

As I think Todd may have mentioned in the last quarterly call, we've engaged full-time a marketing person who's working exclusively on this channel, working with our partners through making a strong commitment to the channel, to encourage them and help them. And Todd can talk about this more, but we're getting very, very smart about the way in which we engage these partners. I mentioned a couple of the contracts where big partners have made a financial commitment in cash contracts, but they will commit to certain levels of activity going forward. It certainly doesn't maximize the opportunity for us, but at least it shows their strong commitment to ensuring that they're going to develop and roll out their product to their customers -- to paying customers. So we're continuing to get smarter, more disciplined around who we take on as partners, and we've got an improving program in our operations for helping getting them going and maximizing the potential for them as well. Todd, is there anything you want to add?

Well, I think it's important that we state the fact that we really are betting close to a dozen new potential partners right now, and the process is more regimented. We're seeking individual partners that obviously have a large customer base, but we're also seeking customers that are seeing this issue as something they really believe as important for their customer base. So that is part of the vetting process. We make sure that we are signing up partners that are passionate about the issue of digital accessibility as well as see the revenue capacity that is available for this channel as well. So as we go through this, we're making sure that we bring on the best partners. And lastly, I'll just say as it relates to the marketing person, they are spending a lot more time with these individuals, and we see each of these partners maturing more in their sales processes. And as a result of that, we will see continued growth.

Understood. And then on the operating expense side, it was a pretty big step up here in Q1. It sounds like maybe there's a lot of almost onetime expense in nature type of items. But is your expected hiring trajectory, do you anticipate that will still ramp throughout 2019 as you build out your implementation teams and your sales and marketing team from this point?

There's no doubt that we are really expecting growth there, Zach. We expect a need to add people and not wait to be too late because we see signs from what we see in our pipeline and how we see the landscape unfolding before us. So you're right though, there was significant onetime extraordinary costs that would have occurred in the first quarter out of the norm as well. But you should expect to see us continue to invest in both marketing, PR and employees who will help us deliver the growth we're anticipating in and working towards.

Understood. And final question, I mean you mentioned there was an increasing number of providers that were popping up within the space. Even though they aren't providing the necessary web accessibility that is sought out by customers, is it still causing any sort of disruption to your potential to get in the door and win some of these deals in a more timely fashion?

I think it's interesting. All of those to me right at the moment validate the importance of and the growing impetus behind this space. They have such a different value proposition. I think some of them are trying to copy our message that's going to last about New York [indiscernible] to get in the door. They just are not in the position yet, any of these competitors that we see to deliver what we deliver, in the way that we do it and the nature of the offering that we have still differentiated. I do think, as I said, we will continue to make sure we invest to differentiate that, [indiscernible] removing noise from the conversation and making sure that AudioEye's value proposition is clear. We feel like we can continue to do that very well.

[Operator Instructions]. At this time, this concludes our question-and-answer session. And I'll turn the call back over to Dr. Bettis for his closing remarks.

Thank you, everyone, for joining us today. I especially want to thank our employees, our partners and our investors for their continued support, and we're looking forward to updating you on our next call. Have a good evening.

Before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay via link available in the Investors section of the company's website. Thank you for joining us today for AudioEye's First Quarter 2019 Earnings Conference Call. You may now disconnect.